IDEAS home Printed from https://ideas.repec.org/p/tcd/tcduee/tep0419.html
   My bibliography  Save this paper

Debt and Taxes: The Sale-Rent Housing Price Ratio in Dublin since 1945

Author

Listed:
  • Richard Keely

    (Trinity College Dublin)

  • Ronan C Lyons

    (Trinity College Dublin)

Abstract

The recent Great Recession highlights the importance of housing to the broader economy, yet few reliable long-run series exist for sale and rental prices of housing. Using hedonic methods, frequency conversion techniques, and a detailed dataset of over one million sale and rental listings from newspapers and online, we construct new quarterly indices of sale and rental prices for Dublin, Ireland for the period starting in 1945 and an annual panel for six areas of the city over the same period. The series show four major market cycles, as well as three distinct phases for housing yield, with downward shifts in the early 1970s and again in the late 1990s. There is some evidence of rents converging across markets within the city but sale prices have diverged over the same period. An error-correction econometric analysis confirms the predictions of economic theory, that credit conditions in the credit market and user cost drive changes in the yield over time.

Suggested Citation

  • Richard Keely & Ronan C Lyons, 2019. "Debt and Taxes: The Sale-Rent Housing Price Ratio in Dublin since 1945," Trinity Economics Papers tep0419, Trinity College Dublin, Department of Economics.
    • Handle: RePEc:tcd:tcduee:tep0419
    as

    Download full text from publisher

    File URL: https://www.tcd.ie/Economics/TEP/2019/TEP0419.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Brent W. Ambrose & Piet Eichholtz & Thies Lindenthal, 2013. "House Prices and Fundamentals: 355 Years of Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(2-3), pages 477-491, March.
    2. Katharina Knoll & Moritz Schularick & Thomas Steger, 2017. "No Price Like Home: Global House Prices, 1870-2012," American Economic Review, American Economic Association, vol. 107(2), pages 331-353, February.
    3. Gerlach, Stefan & Lydon, Reamonn & Stuart, Rebecca, 2015. "Unemployment and inflation in Ireland: 1926-2012," CFS Working Paper Series 514, Center for Financial Studies (CFS).
    4. Kholodilin, Konstantin A. & Limonov, Leonid E. & Waltl, Sofie R., 2021. "Housing rent dynamics and rent regulation in St. Petersburg (1880–1917)," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 81.
    5. Konstantin A. Kholodilin, 2016. "War, housing rents, and free market: Berlin's rental housing during World War I," European Review of Economic History, European Historical Economics Society, vol. 20(3), pages 322-344.
    6. Simon Stevenson, 2003. "Economic, Demographic and Fiscal Influences on Housing Market Dynamics," ERES eres2003_266, European Real Estate Society (ERES).
    7. International Monetary Fund, 2003. "Japan: Staff Report for the 2003 Article IV Consultation," IMF Staff Country Reports 2003/281, International Monetary Fund.
    8. Lyons, Ronan C., 2018. "Credit conditions and the housing price ratio: Evidence from Ireland’s boom and bust," Journal of Housing Economics, Elsevier, vol. 42(C), pages 84-96.
    9. Kelly, Robert & McCann, Fergal & O’Toole, Conor, 2018. "Credit conditions, macroprudential policy and house prices," Journal of Housing Economics, Elsevier, vol. 41(C), pages 153-167.
    10. John V. Duca & John Muellbauer & Anthony Murphy, 2011. "House Prices and Credit Constraints: Making Sense of the US Experience," Economic Journal, Royal Economic Society, vol. 121(552), pages 533-551, May.
    11. Roche, Maurice, 2003. "Will there be a Crash in Irish House Prices?," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2003(4-Winter), pages 1-16.
    12. Emilio Fernandez-Corugedo & John Muellbauer, 2006. "Consumer credit conditions in the United Kingdom," Bank of England working papers 314, Bank of England.
    13. International Monetary Fund, 2003. "Eritrea 2003 Article IV Consultation Staff Report: 2003 Article IV Consultation—Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for E," IMF Staff Country Reports 2003/165, International Monetary Fund.
    14. Gerlach, Stefan & Stuart, Rebecca, 2014. "Money, Interest Rates and Prices in Ireland, 1933-2012," CEPR Discussion Papers 9961, C.E.P.R. Discussion Papers.
    15. repec:mcb:jmoncb:v:45:y:2013:i::p:477-491 is not listed on IDEAS
    16. Poterba, James M, 1992. "Taxation and Housing: Old Questions, New Answers," American Economic Review, American Economic Association, vol. 82(2), pages 237-242, May.
    17. Kennedy, Gerard & McQuinn, Kieran, 2011. "Scenarios for Irish House Prices," Economic Letters 02/EL/11, Central Bank of Ireland.
    18. International Monetary Fund, 2003. "Republic of Latvia: Staff Report for the 2003 Article IV Consultation," IMF Staff Country Reports 2003/113, International Monetary Fund.
    19. International Monetary Fund, 2003. "Ireland: Staff Report for the 2003 Article IV Consultation," IMF Staff Country Reports 2003/242, International Monetary Fund.
    20. Charles Himmelberg & Christopher Mayer & Todd Sinai, 2005. "Assessing High House Prices: Bubbles, Fundamentals and Misperceptions," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 67-92, Fall.
    21. Addison-Smyth, Diarmaid & McQuinn, Kieran & O'Reilly, Gerard, 2009. "Modelling Credit in the Irish Mortgage Market," The Economic and Social Review, Economic and Social Studies, vol. 40(4), pages 371-392.
    22. International Monetary Fund, 2003. "France: Staff Report for the 2003 Article IV Consultation," IMF Staff Country Reports 2003/334, International Monetary Fund.
    23. Mick Silver, 2016. "How to Better Measure Hedonic Residential Property Price Indexes," IMF Working Papers 2016/213, International Monetary Fund.
    24. Kenny, Geoff, 1999. "Modelling the demand and supply sides of the housing market: evidence from Ireland1," Economic Modelling, Elsevier, vol. 16(3), pages 389-409, August.
    25. International Monetary Fund, 2003. "The Kingdom of the Netherlands-Aruba: 2002 Article IV Consultation-Staff Report; Staff Supplement; and Public Information Notice on the Executive Board Discussion," IMF Staff Country Reports 2003/042, International Monetary Fund.
    26. Simon Stevenson, 2008. "Modeling Housing Market Fundamentals: Empirical Evidence of Extreme Market Conditions," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 36(1), pages 1-29, March.
    27. International Monetary Fund, 2003. "Nepal: Staff Report for the 2003 Article IV Consultation," IMF Staff Country Reports 2003/283, International Monetary Fund.
    28. David Rae & Paul van den Noord, 2006. "Ireland's Housing Boom: What has Driven it and Have Prices Overshot?," OECD Economics Department Working Papers 492, OECD Publishing.
    29. Browne, Frank & Conefrey, Thomas & Kennedy, Gerard, 2013. "Understanding Irish house price movements - a user cost of capital approach," Research Technical Papers 04/RT/13, Central Bank of Ireland.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lepinteur, Anthony & Waltl, Sofie R., 2020. "Tracking Owners' Sentiments: Subjective Home Values, Expectations and House Price Dynamics," Department of Economics Working Paper Series 299, WU Vienna University of Economics and Business.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Richard Keely & Ronan C. Lyons, 2022. "Housing Prices, Yields and Credit Conditions in Dublin since 1945," The Journal of Real Estate Finance and Economics, Springer, vol. 64(3), pages 404-439, April.
    2. Lyons, Ronan C., 2018. "Credit conditions and the housing price ratio: Evidence from Ireland’s boom and bust," Journal of Housing Economics, Elsevier, vol. 42(C), pages 84-96.
    3. Ronan C Lyons, 2017. "Credit conditions and the housing price ratio: evidence from Ireland's bubble and crash," Trinity Economics Papers tep0717, Trinity College Dublin, Department of Economics.
    4. Mohajan, Haradhan, 2014. "Food and Nutrition Scenario of Kenya," MPRA Paper 56218, University Library of Munich, Germany, revised 23 May 2014.
    5. Wee Chian Koh & M. Ayhan Kose & Peter S. Nagle & Franziska L. Ohnsorge & Naotaka Sugawara, 2020. "Debt and Financial Crises," Koç University-TUSIAD Economic Research Forum Working Papers 2001, Koc University-TUSIAD Economic Research Forum.
    6. World Bank, 2005. "Angola : Public Expenditure Management and Financial Accountability," World Bank Publications - Reports 8514, The World Bank Group.
    7. Robert M Stern, 2009. "Trade in Financial Services--Has the IMF Been Involved Constructively?," Working Papers 587, Research Seminar in International Economics, University of Michigan.
    8. Gyöngyösi, Győző & Rariga, Judit & Verner, Emil, 2021. "The anatomy of consumption in a household foreign currency debt crisis," SAFE Working Paper Series 332, Leibniz Institute for Financial Research SAFE.
    9. Michal Brzoza-Brzezina, 2005. "Lending Booms in Europe’s Periphery: South-Western Lessons for Central-Eastern Members," Macroeconomics 0502002, University Library of Munich, Germany.
    10. Mr. Andreas Billmeier, 2004. "Ghostbusting: Which Output Gap Measure Really Matters?," IMF Working Papers 2004/146, International Monetary Fund.
    11. Takeo Hoshi & Anil K. Kashyap, 2004. "Japan's Financial Crisis and Economic Stagnation," Journal of Economic Perspectives, American Economic Association, vol. 18(1), pages 3-26, Winter.
    12. Chamon, Marcos, 2007. "Can debt crises be self-fulfilling?," Journal of Development Economics, Elsevier, vol. 82(1), pages 234-244, January.
    13. Brzoza-Brzezina, Michał, 2005. "Lending booms in the new EU Member States: will euro adoption matter?," Working Paper Series 543, European Central Bank.
    14. Alison Pargeter, 2006. "Libya: Reforming the impossible?," Review of African Political Economy, Taylor & Francis Journals, vol. 33(108), pages 219-235, June.
    15. Aaron G. Grech & Reuben Ellul, 2021. "Are the European Commission’s Business and Consumer Survey Results Coincident Indicators for Maltese Economic Activity?," Journal of Business Cycle Research, Springer;Centre for International Research on Economic Tendency Surveys (CIRET), vol. 17(1), pages 91-108, April.
    16. Stephan Barisitz & Annemarie Pemmer, 2006. "Ukraine: Macroeconomic Developments and Structural Change with a Special Focus on the Energy Sector," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 158-176.
    17. Anneke Jessen & Christopher Vignoles, 2005. "Jamaica: trade, integration and the quest for growth," INTAL Working Papers 1264, Inter-American Development Bank, INTAL.
    18. Andreas Billmeier, 2009. "Ghostbusting: which output gap really matters?," International Economics and Economic Policy, Springer, vol. 6(4), pages 391-419, December.
    19. Kholodilin, Konstantin A. & Limonov, Leonid E. & Waltl, Sofie R., 2021. "Housing rent dynamics and rent regulation in St. Petersburg (1880–1917)," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 81.
    20. McQuinn, Kieran, 2014. "Bubble, Bubble Toil and Trouble? An Assessment of the Current State of the Irish Housing Market," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI).

    More about this item

    Keywords

    housing price ratio; housing markets; economic history; user cost.;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • N94 - Economic History - - Regional and Urban History - - - Europe: 1913-
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tcd:tcduee:tep0419. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Colette Angelov (email available below). General contact details of provider: https://edirc.repec.org/data/detcdie.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.